Supporters Of Tax Hike For Rich Get Boost

Some higher-income Jerseyans speak out in favor of idea to address budget shortfall

BY JOE DONOHUEStar-Ledger Staff

A coalition calling for a temporary income tax increase for higher income New Jerseyans to ease the state's budget woes yesterday showcased some unexpected supporters: higher income New Jerseyans.

The taxpayers included a businessman who owns a minor-league basketball team, a former state transportation commissioner and a Princeton councilwoman who is married to a world-famous author.

"Many people of means are not knee-jerk opponents of common-sense tax plans," said Princeton Council member Wendy Benchley, wife of "Jaws" author Peter Benchley.

Former transportation commissioner Alan Sagner of Maplewood dismissed concerns that higher tax rates would trigger an exodus from New Jersey. "I'm not going anywhere. This is my home," he said.

And Herbert Greenberg, owner of Caliper Human Strategies and the Trenton Shooting Stars basketball franchise, said he doesn't mind paying higher state taxes to avoid the budget cuts proposed by Gov. James E. McGreevey. A coalition of more than 90 groups representing teachers, union members, local officials, minorities and others supports the increase as New Jersey grapples with a potential budget deficit of as much as $5 billion in the coming budget year.

The proposal would raise the income tax for single filers earning more than $250,000 annually and married filers earning more than $400,000. They now pay a top rate of 6.37 percent, but that would rise by another 1.2 to 3.1 percent under the proposal, depending on how much they earn. The increase would raise an estimated $1 billion a year, affect 50,000 taxpayers and would be phased out after three years.

Micah Rasmussen, the governor's spokesman, said yesterday that McGreevey flatly refuses to enact increases in either the sales, income or corporate tax to balance the proposed 2004 budget. But Senate Majority Leader Bernard Kenny (D-Hudson), a member of the Senate Budget Committee, said last week that "I think it's inevitable that serious consideration will be given to some sort of high-end income tax increase in the next year or two."

Phyllis Salowe-Kaye, executive director of New Jersey Citizen Action, one of the alliance organizers, said she hopes the Legislature will enact the higher income tax before the July 1 budget year begins. But the group will maintain pressure even if that does not happen, she said.

The wealthy taxpayers who spoke out yesterday all agreed now is the ideal time to increase state income taxes because proposed federal tax cuts would more than make up for any state increase. A study by the nonpartisan Office of Legislative Services concluded that even with the state tax increases proposed by the alliance, taxpayers in the following brackets still would enjoy huge net tax breaks when the proposed federal cuts are factored in: $500,000, a $9,801 net cut; $1 million, a $19,908 net cut; and $2 million, a $31,243 net cut. "The wealthy income taxpayers would barely notice it. They still come out of it big winners," said Kenny.

However, in another sign yesterday of how hard it remains to raise major taxes, Republican Gov. George Pataki warned lawmakers not to seek even a temporary increase in income taxes for rich New Yorkers despite public opinion polls that show widespread support for such a tax.

"I think it's a job-killing tax ... I'm certainly not going to approve of something like that," he said.

Joe Donohue covers state government. The Associated Press contributed to this report.